In a dramatic response to France's proposed tax on music streaming services, Spotify has announced its decision to withdraw promotional support for two major music festivals, signaling a rift between the streaming giant and French music industry policy makers. The streaming behemoth has chosen not to feature the distinguished Francofolies de la Rochelle and the Printemps de Bourges festivals in its lineup, which are scheduled to occur in July and April of this year.
Antoine Monin, Spotify's managing director in France, made the company's stance clear: the planned levy, which could climb as high as 1.75% of streaming revenue from 2024 onwards, poses a significant threat to its financial sustainability. This new tax is set to benefit the Centre National de la Musique (CNM), a body instituted with the mandate to buttress the French music sector.
While all major streaming players including Apple, Google, and Deezer have expressed concerns about the tax, Spotify's, opposition has been notably emphatic. Monin has highlighted the disparity between the financial capabilities of his company and tech titans Google and Apple. Earlier this fiscal year, Spotify felt the pinch, necessitating a price hike and a reduction in their workforce by roughly 17%.
Monin articulated the financial burden during a FranceInfo interview, detailing the costs Spotify already shoulders: "We pay 70% of our revenue to music rights holders, you add to that a VAT at 20%, a tax on digital services at 3%, a tax on video services at 5% and now a streaming tax at 1.75%. How do you expect us to be able to operate in a market like France?"
This action taken by Spotify sends a potent message, not only to French lawmakers but to the entire global music industry, about the challenges streaming platforms face. It underscores the tension between policies aimed at supporting local music ecosystems and the commercial realities of digital music distribution.
As of now, the specifics of the tax are still under negotiation, with its impact on the future of music streaming in France yet to be seen. What remains clear is that Spotify's bold move reflects the company's commitment to safeguarding its business model and its willingness to challenge regulations that it perceives as a financial threat. As the situation unfolds, the music industry and regulators will undoubtedly continue to grapple with finding a balance that serves both the cultural vitality of music and the economic viability of streaming platforms.